MC15 1

1
Power Definitions

• Predisposition to use force
• Ability to employ force
• A has power over B to the extent that he can get
  B to do something that B would not otherwise do
• Capacity to influence the behavior of others

2
Dependence
Power is a function of dependence. The more
dependent one channel member is, the less power
the channel member has vis-à-vis the other
channel member.

• Sources of Dependency/Independence
• Distinctiveness
• Customer loyalty
• Industry Characteristics
• Market Structure

3
Bases For Exercising Power
Reward Capacity to provide benefits to another if
the latter conforms to the influence of the
former. Coercive Ability to punish
another. Legitimate Internalized norms of one
channel member which dictate that of
another. Referent One channel member perceives
his or her goals to be closely allied to or
congruent with another. Expert Power derived from
knowledge
4
Noncoercive Power

• Higher morale
• More likely to cooperate
• Less likely to terminate contracts
• Less likely to file individual law suits
• Less likely to file class-action law suits
• Less likely to seek protective legislation

5
General Inferences

• Some form of power must be exercised in order to
  influence channel members behavior.
• Effectiveness of power bases are
  situation-specific.
• How power is exercised affects the level of
  cooperation and conflict.
• The user of coercive power can reduce the
  stability and viability of the channel and seek
  countervailing power.

6
Internet and Intermediaries
While some traditional intermediaries may
disappear because of the Internet, each click on
the Internet is the delivery of value. Therefore
every click is a transaction, requiring the role
of an intermediary.

• Hypermediation possible because of
• Volume
• Efficiency

• New Types of Intermediaries
• Content sites
• Infrastructure

7
Value of Middlemen in an Internet World

• Unshakable values
• Personal touch
• Relationships
• Quality assurance
• Understanding customers

• Three-Part Strategy of a Small Business
• Service
• Choice
• Speed